Hastert faces double trouble as lawsuit proceeds

Former House Speaker Dennis Hastert, who is facing criminal charges over allegedly hiding cash payments to cover up reported sexual impropriety, suffered a separate legal setback Thursday when a federal judge revived a lawsuit charging that Hastert misused taxpayer money.

U.S. District Court Judge Charles Kocoras had twice dismissed the 2013 lawsuit filed by Hastert’s former business partner J. David John. It alleges that Hastert misapplied federal funds for personal use at a district office Hastert operated in Yorkville, Ill. for several years after he left Congress.

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However, in an order Thursday, Kocoras said John’s lawyers had cleared the legal hurdles needed to proceed with the suit.

“We find that John has pleaded enough in the allegations of his second amended complaint about the original source issue to demonstrate that he sufficiently alerted the FBI to the likelihood of wrongdoing,” the judge wrote in his 11-page ruling.

Kocoroas said John asserted he told the FBI in 2011 that “he had knowledge that Hastert was using federally funded offices, staff, office supplies and vehicles for personal business ventures.”

John said he traveled with Hastert and worked together with him on several projects, including a planned Grand Prix racetrack in Southern California and sports events to be organized in the Middle East.

Reinstatement of the civil suit poses an additional legal headache for Hastert and for federal prosecutors who obtained an indictment in May charging the former speaker with structuring bank withdrawals to avoid federal reporting requirements and with lying to the FBI about where the money was going. The indictment alleged the money was part of $3.5 million Hastert agreed to pay an unnamed longtime acquaintance to compensate for and conceal past misconduct.

A lawyer for John, Michael Goldberg, said in an interview that John’s team plans to press for testimony that could support the case. That effort is likely to include seeking information from the FBI and Hastert.

“We welcome the judge’s decision, and we look forward to the discovery phase of the case, including written discvovery and depositions,” Goldberg said.

Those kinds of inquiries are unlikely to be welcomed by the FBI or Hastert — especially in light of the pending criminal case. Either party could bring a motion to try to halt the suit until the criminal case is resolved.

Hastert is represented in the civil case by his son, Ethan, a partner at Chicago law firm Mayer Brown. Ethan Hastert did not reply to phone and email messages seeking comment.

However, when POLITICO reported in 2009 that Hastert had set up the taxpayer-funded office and was simultaneously pursuing a lobbying career, a Hastert aide said the former speaker kept the two things “completely separate.”

A spokesman for the U.S. Attorney’s Office in Chicago, which is prosecuting Hastert and represents the FBI in civil cases, declined to comment on the judge’s ruling.

John’s suit, known as a “qui tam” action, is a case filed by a private party on behalf of the U.S. Government. If the case is successful, the private party can receive up to 30% of any money recovered on behalf of the government.

The government can take over such suits and pursue them in court, but in April 2014 the U.S. Attorney’s office declined to do that. It offered no explanation for the move.

The issue of who first brought Hastert’s alleged misuse of taxpayer funds to the attention of the FBI could be critical to the lawsuit’s outcome. The law only allows the first person to inform the government about such wrongdoing to pursue a claim to recover the money.

If the criminal case doesn’t result in a quick plea deal, it also has the potential to render the civil suit moot in another way: Hastert’s assets could be completely consumed paying the bills of his high-priced criminal defense team, led by Tom Green of law firm Sidley Austin.